Discount brokers may be a small tribe, but going by the trend, this new category of brokerages has attracted a sizeable number of clients, with plans in place to rapidly scale up operations across the country.
With an estimated 15 per cent of the total stock trade, they charge a reduced commission compared with full-service brokers, but provide no investment advice.
"In the US, 70 per cent of retail volume happens through discount brokers. In India, the trend has caught up well, with discount brokers contributing 15 per cent of the total market turnover currently," Shrey Jain, founder and CEO of SAS Online.Com, a discount broking firm, told PTI.
"Seasoned investors are slowly shifting from traditional brokers to discount brokers to save up to 90 per cent of their brokerage costs," he added.
Launched in April 2013, SAS Online has seen more than a 100 per cent growth year on year in both top line revenue and customer base, with more than 10,000 clients in over 600 cities across the country.
RKSV, a 4-year-old company which is into discount broking, too has grown 100 per cent each year since inception in terms of number of clients.
It currently caters to 30,000 investors, of which 40 per cent are active in stock market trading.
"Full-service brokers typically charge between Rs 100-500 per order (depending on the segment, and charges can vary). Discount brokers, including RKSV, charge Rs 20 per order irrespective of the segment or the size of the trade," RKSV co-founder Raghu Kumar said.
"We foresee 2x-3x growth annually for the next two years. Our goal is 1,00,000 clients in a year and 2,50,000 in two years," he added.
According to an estimate by discount brokerage Samco Securities, the market share of all discount brokers combined could be in the range of 5-8 per cent.
"As digitisation and technological innovations increase, more and more participants will shift to the discount broking platform, helping them capture a lion's share of the broking pie," said Samco Securities CEO Jimeet Modi.
The firm, which commenced its discount broking operations in 2015 and caters to clients across 1,600 cities, has seen a monthly growth of 40 per cent and expects to double the figure year on year over the next 5 years.
Confident of increasing their market share, these discount broking firms are working on several technology-based innovations and taking to brand building initiatives to expand footprint.
"We leverage technology to service our clients and keep
our cost low. A team of total 45 members operate from a single office in Delhi from where we cater to all clients pan India," Jain said.
"We earn by cutting down on unnecessary costs which traditional brokers cannot avoid."
Discount broking firms remain a big draw with tech-savvy investors, who are a mix of metro and non-metro population.
Noting that discount broking is evolving fast, Modi said: "Due to compelling value proposition to customers and by way of savings in brokerage costs - to the extent of 90 per cent - sooner or later, masses will shift to the discount broking platform.
